Buying a beer bar

[torrenova]

Good followup explanation.

 

The problem I have with key money is that it is often not clarified what the amount will be. So say you get a bar which is performing poorly. Your initial purchase price may be low and your new lease may require little key money.

 

Move on 3 years (or whatever the lease was for) and you're doing great. Then near the end of your lease, the landlord asks for Bt XYZ,000 key money. Now you have 4 options:

 

1. Pay it, hopefully after some negotiation.

2. Pay it and try and extend the lease term, thus reducing the effective annual amount.

3. Don't pay it and just walk away, losing your investment.

4. Sell the bar most likely at a poor price.

 

So many people get caught out like that. they pay the Bt20,000 per month but don't put away the Bt10,000 they need to cover the next lump of key money.

[Guest]

Hi torrenova and TopCat,

 

Great info. from you both. Thanks for sharing. You're both the definitive word here, to be sure. ::

 

HT

[Guest]

>>>>Sometimes it really does seem like the landlords are the ones who really make the money in the bar business.<<<

 

Yea....they're sitting pretty. Zero risk, and can call all the shots.

 

It seems what makes it really scary there. Too many unknown factors, such as future lease agreements, unknown "Key" amounts, tea money that can come out of know where, unless well connected.....

 

Not a business for the light-hearted, to be sure, even when not having a drinking problem, and can put some serious work into it. And I suspect your "Thai partner" is also wrought with many perils. Can't forget that a farang cannot own a bar there, by himself. Another factor which can be a shocking downfall, if not done right. I know a few horror stories related to that.

 

HT

[Nervous_Dog]

In Australia Key money is now banned, however I have three times had people pay me money to get into my leases when I was volunteerilly moving.

 

Not idea if still common

 

DOG

[kwai_hai]

HIGH THAIED said:

Can't forget that a farang cannot own a bar there, by himself. Another factor which can be a shocking downfall, if not done right. I know a few horror stories related to that.

 

HT

 

News to me.....of course you can.

 

Cheers N Beers,

[..]

Maybe you just think you own it LOL! Naw, I am sure that HT is incorrect.

 

BTW, doing my share to help in your absence. I was there 'til 0400 last night and then had brekky at Lub Scene with a certain Thai ex-model we both know!

 

Cheers,

SD

[kwai_hai]

Damn - every time I read your posts you make me jealous. I am sure it is on purpose. Wish I was there for a late night black so with you.

[samak]

do be precise, the farang can own the bar, but not the property; correct?

[..]

kwai_hai said:Damn - every time I read your posts you make me jealous. I am sure it is on purpose. Wish I was there for a late night black so with you.

Of course it is on purpose, bro! Just wanna keep you in the loop and give you sumptin' to dream about while stuck in the netherreigons of the world! And it's fun takin' the piss !

 

Given your schedule by Mrs Kwai_Hai, it looks like I'll miss you this break. I will be in the States from the 13th-31st...

 

Cheers,

SD

[Guest]

kwai_hai,

 

>>>>>News to me.....of course you can.<<<<

 

From my understanding, you need to have a 51% ownership of a Thai business, by Thai national's. In addition, you need to hire X amount of Thai's to be employed there. I think 4 is the minimum??? And you can't own land there, as you might elsewhere. You can buy a condo, but it can't be on the ground floor, sitting on Thai soil. You surely cannot just go there, and buy a house, and own it out-right.

 

There are work-arounds concerning this, but essentially the law. Very large capitalized companies are another deal, but involves them pouring x amount of $$$ into the economy, and additional hiring requirements of Thai nationals.

 

Maybe I'm wrong on this, but don't think so.

 

HT